HDFC joins Rs 4 trillion market capitalisation league; stock hits new high

Housing Development Finance Corporation (HDFC) on Thursday crossed Rs 4 trillion market capitalisation (m-cap)-mark for the first time after its shares hit a new high in an otherwise subdued market.

The stock of the mortgage lender touched a fresh record high of Rs 2,327 per share, up 2 per cent intra-day on the BSE, surpassing its previous high of Rs 2,301 touched on July 5.

At 10:32 am, HDFC was trading 1.6 per cent higher at Rs 2,324 with a market cap of Rs 4.01 trillion, the BSE data show. In comparison, the Sensex was trading lower by 0.11 per cent at 39,170 levels.

Previously, four companies have crossed this achievement—Reliance Industries (RIL), Tata Consultancy Services (TCS), HDFC Bank, ITC and Oil & Natural Gas Corporation (ONGC).

With this development, HDFC stands at fourth position in the overall m-cap ranking. RIL is India’s most valued company with the m-cap of Rs 8.08 trillion, followed by TCS and HDFC Bank at Rs 7.86 trillion and Rs 6.62 trillion, respectively.

Thus far in the calendar year 2019, HDFC has outperformed the market by surging 18 per cent as compared to a 9 per cent rise in the S&P BSE Sensex.

The Board of Directors of HDFC is scheduled to meet on August 2, 2019 to approve financial results for the quarter ended June 30, 2019 (Q1FY20). The board will also consider the issuance of secured redeemable non-convertible debentures (NCDs) aggregating Rs 45,000 crore on a private placement basis.

HDFC maintains strong positioning and is expected to clock 15 per cent year on year (YoY) loan growth, as corporate book consolidates, according to Prabhudas Lilladher.

“While QoQ earnings stand tad moderate, YoY, profit after tax (PAT) is expected to clock 21 per cent YoY growth, primarily led by steady market share gains and stable asset quality. Improving spreads to help maintain NIMs (net interest margins) closer to 3 per cent levels despite sustenance of heavy liquidity on balance sheet,” the brokerage firm said in an earnings preview.

Furthermore, IDBI Capital expects HDFC’s loan growth to moderate to 13 per cent YoY and lower net interest income growth, due to pressure on spreads and higher PAT growth after factoring gain from sale of stake in Gruh Finance.

Analysts at JP Morgan remain ‘overweight’ on HDFC with March 2020 target price of Rs 2,600 per share. The foreign brokerage firm sees HDFC as a low-risk play on an improving underlying housing cycle. It believes HDFC’s book quality is one of the best among its mortgage peer group, and the company remains the lowest-cost mortgage provider in India.